Shell costs to rise ‘aggressively’

Bank of America Merrill Lynch were among analysts downgrading their view on Shell (RDSB.L) on Friday, suggesting the shares will
‘underperform’.

In a note after Shell disappointed markets with a decline in annual profits, the BoAML
analysts explained: ‘Our cautious view stems from concerns that Shell’s underlying costs
and capex are set to rise more aggressively than the market currently believes.’

‘Ultimately we see this weighing on returns, earnings momentum and distributable cash flows in the medium term, underpinning our view the shares could face a de-rating,’ they continued.

Shell hiked its dividend on Thursday by more than the market expected. ‘Whilst we remain
fully confident in Shell’s ability to pay its dividend, we see its 21% premium to European
big oil... as unsustainable as returns and free cash flow deteriorate,’ the BoAML analysts
added.

Shell shares reversed a Friday morning fall to rise by 0.4% to 2,285p in rallying
markets.

Nomura
lifts revenues projection for BSkyB

Walker's 2013 revenue growth estimate rises from 4.5% to 5.5% based on a stronger-than
expected performance in retail; higher wholesale revenue; a modest advertising
recovery; and strong growth in the Sky Bet division, which was up 40% in the first
half.

'BSkyB makes itself less vulnerable to competitive threats through innovation as well as
rights renewal and extension,' he said. 'Sony, Warner and Universal have all been recently
renewed. On-demand connections are up 70% to 1.7 million and use has doubled.'

Walker has a 'buy' recommendation on the shares, and a target price of 975p.

3i shares now ‘fully valued’ says Investec

Rallying 3i (III.L) shares are now fully valued, says Investec analyst Henry Freeman, who has downgraded his recommendation on the buy-out group to ‘hold’.

Freeman noted that the private equity company’s shares have rallied by 30% since the publication of interim results in November, helped higher again this week by the revelation that activist investor Edward Bramson has been building a stake.

Investec’s old 252p price target was surpassed. ‘While we revise up our price target to 278p, we believe the shares are now fully valued and downgrade our recommendation to HOLD,’ said Freeman.

‘We cannot see what value Sherborne Investors can add to the cost and debt reduction strategy currently being executed on by CEO Simon Borrows and his team,’ he added.

Tate & Lyle issues downbeat trading update

'Tate has issued a subdued Q3 trading update for the period covering 1 October to 31 December, with a cautious tone across most of its activities in our view,' Shirley said. 'On profitability, management states that ‘as expected adjusted profit before tax was lower than the comparative period’ due to the investment in the group’s business transformation initiatives.'

Based on the cautious tone of the statement Shirley has put his 2013 and 2014 forecasts under review, and expects to reduce them. He reiterated his 'hold' recommendation on the shares.

Shell costs to rise ‘aggressively’

Bank of America Merrill Lynch were among analysts downgrading their view on Shell (RDSB.L) on Friday, suggesting the shares will
‘underperform’.

In a note after Shell disappointed markets with a decline in annual profits, the BoAML
analysts explained: ‘Our cautious view stems from concerns that Shell’s underlying costs
and capex are set to rise more aggressively than the market currently believes.’

‘Ultimately we see this weighing on returns, earnings momentum and distributable cash flows in the medium term, underpinning our view the shares could face a de-rating,’ they continued.

Shell hiked its dividend on Thursday by more than the market expected. ‘Whilst we remain
fully confident in Shell’s ability to pay its dividend, we see its 21% premium to European
big oil... as unsustainable as returns and free cash flow deteriorate,’ the BoAML analysts
added.

Shell shares reversed a Friday morning fall to rise by 0.4% to 2,285p in rallying
markets.

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Nomura
lifts revenues projection for BSkyB

Walker's 2013 revenue growth estimate rises from 4.5% to 5.5% based on a stronger-than
expected performance in retail; higher wholesale revenue; a modest advertising
recovery; and strong growth in the Sky Bet division, which was up 40% in the first
half.

'BSkyB makes itself less vulnerable to competitive threats through innovation as well as
rights renewal and extension,' he said. 'Sony, Warner and Universal have all been recently
renewed. On-demand connections are up 70% to 1.7 million and use has doubled.'

Walker has a 'buy' recommendation on the shares, and a target price of 975p.

Shares in the group closed at 825p on Friday, up 8p or 1%.

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3i shares now ‘fully valued’ says Investec

Rallying 3i (III.L) shares are now fully valued, says Investec analyst Henry Freeman, who has downgraded his recommendation on the buy-out group to ‘hold’.

Freeman noted that the private equity company’s shares have rallied by 30% since the publication of interim results in November, helped higher again this week by the revelation that activist investor Edward Bramson has been building a stake.

Investec’s old 252p price target was surpassed. ‘While we revise up our price target to 278p, we believe the shares are now fully valued and downgrade our recommendation to HOLD,’ said Freeman.

‘We cannot see what value Sherborne Investors can add to the cost and debt reduction strategy currently being executed on by CEO Simon Borrows and his team,’ he added.

3i shares rose on Friday, rising by 2% to 268.7p.

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Tate & Lyle issues downbeat trading update

'Tate has issued a subdued Q3 trading update for the period covering 1 October to 31 December, with a cautious tone across most of its activities in our view,' Shirley said. 'On profitability, management states that ‘as expected adjusted profit before tax was lower than the comparative period’ due to the investment in the group’s business transformation initiatives.'

Based on the cautious tone of the statement Shirley has put his 2013 and 2014 forecasts under review, and expects to reduce them. He reiterated his 'hold' recommendation on the shares.

Shares in the group closed at 791p on Friday, down 21p or 2.5%.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

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